Cuba Sostenible

Interview with Carlos Fernández-Aballí and Gennady Rodríguez

Cuba Strategies Inc15 October 2016

In the aftermath of the Energizing Cuba conference, where the Americas Society / Council of Americas and Cuba Strategies Inc. collaborated to discuss the subject of renewable energy in Cuba and its potential as an investment opportunity, journalist Yosvany Albelo Sandaran, from Oncuba, extended some questions to two of the members of Cuba Strategies Inc. Fragments of this interview were included in his article about the meeting involving businessmen, academics and students in NY. Cuba Strategies decided to publish the entire interview and to share some insights on issues that may be of interest to all of those who were aware of the event.

Interview with Carlos Fernández-Aballí and Gennady Rodríguez, team members of Cuba Strategies Inc. on October 12, 2016

Yosvany: How was the event? Did it turn out as you anticipated?

Guennady: To a large extent the objectives that we had set were met. The room was filled with businessmen, representatives of organizations and business students who were all very curious on the subject of renewables in Cuba. We had the opportunity to present a top level panel, both from the side of the Cubans who visited us, and from the American experts who spoke and gave their perspective. We had important American developers participating such as General Electric and Greenskies Renewable Energy, as well as financiers, bankers, contractors and consultants. The only thing that affected us was Hurricane Matthew, which prevented other speakers who were invited to participate, such as Dr. Conrado Moreno, specialist from CETER in Cuba, and the lawyer Ambar Diaz, who has represented several American businesses in the Island.

Yosvany: Renewable energy sources are varied, but apparently Cuba has more potential to focus development on only solar, wind and biomass - what is the extent of the investment opportunity in these three renewable energy areas? Will the benefits outweigh the costs?

Carlos: Cuba has great potential for wind energy (> to 12GW) and solar (1500 kWh / m^2 / year). In both cases, there are extensive measurements done for years that support it. The opportunities available in the Portfolio of Foreign Investment projects are carefully studied to ensure mutual benefit of all parties. It is difficult to find opportunities to invest in renewable energy better structured and with less risk than in Cuba. All studies shows that these projects are profitable. In the case of the 19 bioelectric with cane and marabou, the planned investments corresponds to the availability of biomass. In Cuba sugarcane also opens the possibility of ethanol as an energy carrier for transport, without representing a risk for food security. Cuba has a long tradition in sugarcane, the energy industry has great potential to replace fuel imports and contribute to the base generation of the country. Professor Piñon, University of Texas, also addressed the importance of the sugarcane on his panel.

Yosvany: Has there been any substantive interest?

Guennady: There is a lot of interest about Cuba and its opportunities, but there is also risk perception by US companies and especially the large ones, as many perceive the embargo / blockade as a non-negotiable operational risk; however, these companies increasingly realize how convenient it is to enter the Cuban stage and we believe that such meetings / workshops as Energizing Cuba can contribute to a better understanding of how to generate opportunities for both countries. In the particular case of this event, we have been, at least, in contact with four companies who want to explore their opportunities directly.

Yosvany: Could it be an obstacle, in addition to the blockade, that the Cuban government still doesn't allow the Cubans with capital to participate in this kind of business? Haven't you consider this as an element that may generate distrust among potential American investors?

Gennady: I do not think that's what is happening, actually, according to my knowledge of the regulations, there is no limitation on the "nationality" of the entrepreneur, but to where you live or where your company was incorporated; Cubans who live abroad and have their businesses or their capital in other countries, according to the rules for foreign investment, are not particularly limited in some way by the fact of being Cuban. There are many opinions about it, because some say that they should not be considered "foreign" when investing in their own country; however, if their companies were incorporated in other countries, it is not uncommon to have special requirements. On the other hand, Cuba is in a stage of transformation, if we refer to the guidelines of the last forum of the CCP, the regulatory framework to establish private companies within the country seems to be already in the political agenda, it remains to be seen what will be its content and scope.

Yosvany: One of the panels dealt with the decentralization of energy production, how to apply it in Cuba, where the economy and decisions are still so centralized:

Carlos: I believe in the importance of planning and being prospective. I also believe in the necessary role the market has to play to encourage development. So I think that in Cuba we will find the ways for all the good things to be done.

The decentralized use of renewable energy sources opens up important spaces for efficiency and to reduce the level of investment needed to transform our energy matrix in a renewable energy one.

I think there are several principles that illustrate this; for example, more than 12 percent of the electricity we use as Cubans is spent on heating water for the shower, and that's because there are many people who still heat the water with gas, as 98% of Cubans bathe with hot water. In other countries the consumption of energy for heating water amounts to about 20%, points out the engineer John Alger of Alternate Energy Technologies. This energy is provided by the sun directly on our roofs, it is not transmitted over the network. If we were to install photovoltaic solar panels centrally to meet this consumer need, we would have to install 9 times more area for panels than if we did with solar heaters on the roof of our house, and with a technology 5 times more expensive than the solar thermal is. Another upside is that it takes advantage of the dead area of roofs instead of large tracts of land that can be useful for other purposes. In the case of decentralized PV at the scale of buildings or homes, there are advantages in transmission losses, the use of ceilings and the decentralization of the energy industry to the local, creating jobs with high added value in the communities. The U.S. company Greenskies Renewable Energy is a good example of this. Air conditioning, which can also be solved with the solar thermal technologies and minimal grid load, is another example that is actualized by the U.S. company Vaporgenics, who were also on the panel. Climate represents between 40 and 80 percent of the typical consumption of buildings.

Local sourcing of energy production helps realize the solution of the problem and focuses the benefits. There are several keys, one is to put the technology in the hands of Cuban families. The others are energy cooperatives and engineering services, and in Cuba there are several working. It maybe worth extending these possibilities to the self-employed as well, or finally create other forms of association in Cuba, I like cooperative forms best.

Yosvany: How did the participants received the round of talks on the legal issues?

Guennady: From the start of the morning session, the questions related to the legal framework began emerging, obviously a key issue for those who are about to start a business project, especially if it comes to Americans exploring opportunities on the island. Fortunately, we had the privilege of having Professor Narciso Cobo, one of the best specialists in commercial law in our country and we covered most of the aspects under Cuban law, including such sensitive issues as the expropriations, the hiring of local labor and insurance. The regulations in the United States were also of great interest and the current requirements to invest in renewables. We were also fortunate to have the U.S. attorney, Aki Bayz, who has spent a good 20 years advising companies on investing in countries affected by the sanctions of the U.S. government. We will publish later on this issue on the website www.energizingcuba.com. As expected, there are many points that remained to be filled, but we are sure there will be more opportunities for exchange.

Yosvany: There were two other universities in the program, how did it work?

Carlos: The future of any endeavor is its youth, in them rests the continuity of the job done and the possibility of elevating it to the height of its time. The concept, Energizing Cuba, can be seen from the pragmatic to the spiritual.

I sat in a corner of the room at the Americas Society and thought to myself, what a beautiful group of people. The room was full young people of many ages. They laughed and participated with determination and enthusiasm, as they conversed how to assist in providing power to the development program of our nation. It seems incredible we sat in NY discussing these things, and it was here that opportunities, spontaneity, creativity and knowledge met with the dare to dream. That is essentially the value of universities: serve as a springboard or runway towards the dreams of any society. In the event there were participants linked to many universities, the University of Texas, The Technological University of Havana - Cujae, University of Havana, Duke University, Columbia University, the New School of NY and, together with us, other 30 institutions of higher education in the world participating this year in the competition on Energy in Emerging Markets of Duke University, this time entitled "Revolutionary Power: a Look at Cuba's Energy Future". The award is to go to Havana to the International Conference on Renewable Energy (CIER 2017), where the winners will present their work.

Cuba captures the imagination of many young people in the world, including ours, those who are on the island and those who are out there. Initiatives such as Energizing Cuba can call our young people, invite them to dream in a future that is forged from a practical, workable result, and among all of us.

Yosvany: One of the recognized strengths of Cuba is its human capital and training, which has suffered in recent years. Could Cuba take on in a short term investments in this field with its own technicians?

Carlos: Cuba has the human resources. There is a department of energy in every university in the country. There are also many institutions such as Cubasolar, dedicated to promoting expertise on these topics. The best example is, that where the capital has been available, INEL has already developed 150 MW of wind and some others in Photovoltaics projects.